U.S. House airs patent reform debate

SAN JOSE, Calif.  The debate over patent reform came to the U.S. House of Representatives Thursday (April 30) as a diverse set of five industry executives, an academic and an engineer testified on their views for and against the draft Patent Reform Act of 2009.

Debate centered around provisions on infringement damages and post-grant review of patents. Rep. Lamar Smith (R-Tex.), one of the sponsors of the bill (H.R. 1260), suggested it could face several amendments before Congress approves any new legislation.

A spokesman for the House Judiciary that sponsored the hearing said the committee could vote soon to send the draft bill to the House floor. A Senate committee sent a companion bill to the Senate floor for debate in early April. Final legislation would have to reconcile any differences between the bills.

Top attorney's for Cisco Systems and Intel Corp.—both members of the Coalition on Patent Fairness—testified in favor of the bill, asking members to bolster provisions limiting damages. "The threat of a jackpot award is real," said Mark Chandler, general counsel for Cisco in his testimony.

In the past seven years 15 cases have awarded damages greater than $100 million and at least five were over $500 million, Chandler said. He also asked for provisions that would give companies who independently invented a technology immunity from infringement claims.

David Simon, chief patent counsel for Intel, asked members to back apportionment, an approach tying damages to the portion of a product's value an infringed patent represents. In its compromise, the Senate committee threw out apportionment in favor of a so-called gatekeeper function in which judges instruct juries on using one or more of the guidelines developed by a Georgia-Pacific case.

Simon called those guidelines "vague and uncertain, and not at all up to the task of providing meaningful guidance to judges and juries."

He said companies face costs ranging from $5 to $20 million to defend themselves from often frivolous infringement suits, most of them brought by companies that exist to assert patents. "I have spoken to defendants that cannot afford to litigate or to settle," he said.

Simon also called for tougher laws limiting the jurisdictions for infringement cases.

Bernard Cassidy, general counsel at Tessera Inc. a member of the Innovation Alliance, was among those testifying against the bill. A series of court decisions have already shifted the balance of power between patent owners and users, Cassidy said.

"It is troubling to many small technology companies that, at a time of such grave economic uncertainty, Congress would seek to fundamentally alter the economic structure of our nation's patent system," he said.

Cassidy called for members to support the Senate compromise on using the gatekeeper approach to calculating infringement damages.

He also asked them to strike down draft measures on new post-grant examination procedures that he said "will allow repeated frivolous challenges, decreased certainty regarding validity and enforceability of patents, and lower-value patents for U.S. businesses and patent holders."